Looking at the big picture, although prices dropped during the second half of 2011, the Index averaged 228 points in 2011 — the highest average since FAO started measuring international food prices in 1990. The previous high was in 2008 at 200 points.

FAO relays the decrease was primarily driven by sharp falls in international prices of cereals, sugar and oils due to bumper 2011 crops coupled with slowing demand and a stronger US dollar. Most commodities were affected.

It will be difficult to make any predictions on price trends for the coming months, said Abdolreza Abbassian, FAO senior grains economist. “International prices of many food commodities have declined in recent months, but given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead,” Abbassian said.

Cereal prices registered the biggest decline. In December, the FAO Cereal Price Index decreased 4.8 percent to 218 points. In 2011, the FAO cereal price index averaged 247 points, up 35 percent from 2010 – which was the highest total since the 1970s.

In December, the FAO Oils and Fats Price Index totaled 227 points, down 3 percent from November and far below the 264 points tallied one year ago.

All dairy products in December were up slightly with the exception of butter, which dropped by 1 percent. As a result, the FAO Dairy Price Index averaged 202 points, almost unchanged from November. For the year, dairy products were 10 percent more than in 2010, registering particularly strong gains for skim milk powder and casein, which gained 17 percent each. butter and whole milk powder prices registered modest increases, which increased by 11 percent, and cheese was up by 8 percent.

For the fifth consecutive month, the FAO Sugar Price Index decreased to 327 points in December, down 4 percent from November and 18 percent from its peak in July. Its weakness in recent months primarily reflects expectations of a large world production surplus over the new season, coupled with good harvests in India, the European Union, Thailand and the Russian Federation.